Interactive Brokers Group, Inc. (IBKR) Fell Out Of Favor With Hedge Funds

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Interactive Brokers Group, Inc. (NASDAQ:IBKR) changed recently.

Interactive Brokers Group, Inc. (NASDAQ:IBKR) shareholders have witnessed a decrease in hedge fund sentiment lately. Interactive Brokers Group, Inc. (NASDAQ:IBKR) was in 31 hedge funds’ portfolios at the end of September. The all time high for this statistic is 37. There were 36 hedge funds in our database with IBKR positions at the end of the second quarter. Our calculations also showed that IBKR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s review the key hedge fund action surrounding Interactive Brokers Group, Inc. (NASDAQ:IBKR).

William Von Mueffling - Cantillon Capital Management

William Von Mueffling of Cantillon Capital Management

Do Hedge Funds Think IBKR Is A Good Stock To Buy Now?

At the end of September, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from the previous quarter. The graph below displays the number of hedge funds with bullish position in IBKR over the last 25 quarters. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

Among these funds, Select Equity Group held the most valuable stake in Interactive Brokers Group, Inc. (NASDAQ:IBKR), which was worth $361.4 million at the end of the third quarter. On the second spot was Bares Capital Management which amassed $323.5 million worth of shares. Cantillon Capital Management, Ancient Art (Teton Capital), and Marshall Wace LLP were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Ancient Art (Teton Capital) allocated the biggest weight to Interactive Brokers Group, Inc. (NASDAQ:IBKR), around 11.42% of its 13F portfolio. Owls Nest Partners is also relatively very bullish on the stock, dishing out 9.55 percent of its 13F equity portfolio to IBKR.

Seeing as Interactive Brokers Group, Inc. (NASDAQ:IBKR) has experienced bearish sentiment from the aggregate hedge fund industry, logic holds that there exists a select few hedge funds that elected to cut their entire stakes in the third quarter. Interestingly, Dmitry Balyasny’s Balyasny Asset Management dumped the biggest stake of the “upper crust” of funds monitored by Insider Monkey, comprising close to $21.8 million in stock, and Paul Tudor Jones’s Tudor Investment Corp was right behind this move, as the fund dumped about $5.4 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 5 funds in the third quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Interactive Brokers Group, Inc. (NASDAQ:IBKR) but similarly valued. These stocks are Energy Transfer L.P. (NYSE:ET), ONEOK, Inc. (NYSE:OKE), Generac Holdings Inc. (NYSE:GNRC), Consolidated Edison, Inc. (NYSE:ED), Albemarle Corporation (NYSE:ALB), ViacomCBS Inc. (NASDAQ:VIAC), and Canon Inc. (NYSE:CAJ). This group of stocks’ market caps resemble IBKR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ET 29 727715 0
OKE 18 124365 -8
GNRC 39 725200 1
ED 24 364191 -6
ALB 38 317872 10
VIAC 64 1254114 -7
CAJ 8 64340 0
Average 31.4 511114 -1.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 31.4 hedge funds with bullish positions and the average amount invested in these stocks was $511 million. That figure was $1477 million in IBKR’s case. ViacomCBS Inc. (NASDAQ:VIAC) is the most popular stock in this table. On the other hand Canon Inc. (NYSE:CAJ) is the least popular one with only 8 bullish hedge fund positions. Interactive Brokers Group, Inc. (NASDAQ:IBKR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for IBKR is 45.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. A small number of hedge funds were also right about betting on IBKR as the stock returned 18.6% since the end of the third quarter (through 11/30) and outperformed the market by an even larger margin.

Follow Interactive Brokers Group Inc. (NASDAQ:IBKR)

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Disclosure: None. This article was originally published at Insider Monkey.